Regular readers of the Trading Gurus blog will be aware that we have been pondering the possible effects of additional regulation on markets on both sides of the Atlantic for some considerable time now. In this guest post Alex Krishtop of Edgesense Solutions speculates about what the future holds for the world's financial markets. In our view Alex's crystal ball is much clearer than those of the vast majority of market commentators.
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In a press release today FXCM have announced that:
Its U.K. subsidiaries, Forex Capital Markets Limited and FXCM Securities Limited, [have] entered into a settlement with the Financial Conduct Authority (“FCA”). The settlement addresses trade execution practices concerning the handling of price improvements on FXCM UK’s offsetting orders from August 2006 – December 2010.
Somewhat unusually for the Trading Gurus, here we reproduce in full today's statement by CFTC Commissioner Bart Chilton, without further comment:
On September 30th, at the stroke of midnight, our country will face a government shutdown unless a continuing resolution to fund it is adopted. That would be grave news for consumers.
It's all go today. I've only just finished blogging about connecting a new trading platform to one of my own brokers, and now I find said broker is in the news for a very different reason. The U.S. Commodity Futures Trading Commission have just issued a press release announcing that they have:
We've previously discussed a variety of academic and political views on the costs and/or benefits of high frequency trading here on the Trading Gurus blog. If that type of thing is of interest to you as well then you might want to wander over to The Economist, where a "virtual debate" is currently taking place on the topic of "This house believes that high-frequency trading contributes to the overall quality of markets".
At last we know the answer to the questions posed by FXCM themselves back in August following settlement of charges brought by the NFA, when they revealed that:
FXCM has set aside a $16 million reserve for the…. anticipated CFTC settlement.
Yet again the CFTC have simultaneously:
Following on from last month's European attack on the City of London a new front has opened up in the war currently being waged to regulate away risk in the world's financial markets. However this time around Britain is fighting back in the courts! Bloomberg reports that:
Fresh from agreeing a settlement with FXCM's UK subsidiary, the CFTC has stepped up its campaign in the courts against "unregistered" RFEDs by announcing that it is bringing civil actions against another 11 foreign currency firms. As in their first such sweep a number of those firms are based in far away places such as Belize, the British Virgin Islands and Cyprus. However two names stand out in the CFTC's blacklist of miscreants as being more "onshore" than the others, namely:
My attention has recently been drawn to an academic research paper entitled High Frequency Trading and The New-Market Makers. The author, who is from the VU University in Amsterdam, investigates the connection between high frequency trading and the emergence of new exchanges here in Europe:
Fresh from having their UK subsidiary fined by the CFTC earlier this month, FXCM have now been fined $2 million by the National Futures Association. Once again the complaint against FXCM and their CEO Drew Niv and details of the agreed settlement have been published simultaneously. Once again FXCM neither admit nor deny the allegations in the complaint, which concern FXCM's failure to pass on positive slippage from their liquidity providers to their customers, and lapses in their anti money laundering procedures. However this time around FXCM's customers do stand to benefit financially since one of the agreed sanctions states that: